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Funding Options

Mainly Debt Capital, but some offer part or all required Capital for Equity

  • Conventional Banks
  • Community Banks
  • Credit Unions
  • Non-Bank Lenders
  • Alternative Lenders
  • Bridge Lenders
  • Local Family Offices
  • High-Net-Worth Individuals
  • Community Collaboratives
  • Other types of Alternative Lenders

  • Specialties:
    • Cash Flow Lenders
    • Equipment Lenders
    • Vehicle Lenders
    • Real Estate Lenders

  • Types:
    • Conventional (75%-90% Loan to Value - LTV - or Cost - LTC)
    • Seconds (remaining 10%-25% LTV or LTC; higher interest rate)
    • Line of Credit (including Credit Cards, revolving Seconds; higher interest rate)
    • Participation (discounted equity purchases after completely paid off)
    • Mezzanine (lender can convert to an equity interest in case of default, subordinate to senior lenders; higher interest rate)
    • Convertable Note (considered an equity play)
    • Hard Money (based on asset value versus individual credit score; short term; higher interest rate)

  • Suppliers (who profit from your existence or growth)
  • Customers:
    • Give a discount for a year for upfront cash
    • Commit to a subscription model for a year
    • Government contract with big payment up front

  • Grants (Government, Veteran Benefit, Non-Profit, ...)
  • Sponsorships (for sponsors' exposure on buildings/vehicles/marketing/websites, at events, ...)
  • Government Programs that fit into local/national leadership agendas

  • Owner Carry:
    • Seller finances the Buyer
    • 1-2 years to launch project or business
    • Longer if mutually beneficial
    • The note can be sold for the lump sum Seller may need or prefer

  • Loan Assumptions

  • Buying Businesses:
    • Set up Lenders in advance based on the collateral to be acquired
    • Be their salesman or consultant for equity and subsistance compensation until you own the company
    • May open up other options, such as Owner Carry
      • With the option to buy at the current price
      • Start implementing your growth policies in advance
      • You'll also learn quickly if you want the company
    • Build relationship so Seller wants you at the helm, not an impersonal Buyer from a different region or culture
    • Once the Seller is very happy to have you as the buyer:
      • Have Seller finance equipment real estate, cash-flow, etc to maximum
      • Assume the loans

  • More in the book description, Customer-Funded Business

  • Debt Lenders
  • Equity Funders

  • Additions appreciated

"We consult on all the above"

PROSPER SYSTEMS, LLC (.biz)  •  Kenton H Johnson (.com), Founding Member
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